China Steps Up Measures to Support Its Tumbling Currency

China is attempting a difficult balancing act of loosening monetary policy without undermining its currency. After aggressive easing and a resurgent US dollar sent the yuan toward the weakest level since 2007, policymakers shifted focus to shoring up the exchange rate. They held off from expected easing measures such as cutting the amount of cash lenders must hold in reserve. To boost demand for the currency, they announced record issuance of yuan-denominated bills in Hong Kong. Soaring Hong Kong funding costs are also helping the People’s Bank of China by making it expensive to bet against the yuan. The central bank’s boldest move yet is to stop buying government bonds, which may lift yields from record lows and alleviate pressure on the currency. At some point, however, Beijing will need to adopt more forceful stimulus. Equity investors aren’t confident policymakers will pull off their tightrope walk, with the MSCI China Index down 20% from its October high.

The death toll in the devastating Los Angeles fires has climbed to 10. The wildfires have scorched more than 30,000 acres, razing homes and forcing about 180,000 residents to flee. Economic losses have been estimated at $135 billion to $150 billion by AccuWeather, which would rank among the costliest natural disasters in modern US history. But there are signs of hope. Winds are forecast to weaken on Friday. A smaller blaze in the Hollywood Hills was quickly encircled, and the Eaton Fire bearing down on Pasadena has slowed its spread.